The problems of government and business solutions to "unethical" practices as the same. Both government and business involve men, who, if given the wrong sets of incentives, may act in ways that ARE selfish AND at the expense of others. Such situations TRANSFER rather than CREATE wealth. This is something worth thinking about because economics is all about the ways we better allocate resources to CREATE wealth.
Just like in Smith's argument, someone who earns money by producing something has benefitted himself but he likely has also benefited someone else. The key here is that he will have benefited someone else if he is in a competitive market. Generally, markets will police, on their own, any attempt for an individual to be greedy, selfish, unfair etc and in the case where they do not, while governments may be able to help, they often won't for similar reasons because governments do not generally face competition.
In the last part of the discussion about Smith v. Marx v. Keynes I wanted to point out two crucial things. First, all of the above were focused on trying to allocate resources most efficiently. The fact that they came up with different answers is somewhat a result of the different circumstances they saw around them. Second, it is important to know how economists ended up where they are and to value what Smith and economics actually says. Economics does not say that being selfish is the way to get ahead, what it does say is that competition will allow for incentives that align acting in self-interest with service to others.
Next time we'll focus on normative and positive statements. You need to read BE 570-571, 596-603, and 608-612. Then bring an article which addresses an issue you believe needs to be corrected because of greed/fairness/equality etc. Finally, separate this list of statements into normative and positive:
Just like in Smith's argument, someone who earns money by producing something has benefitted himself but he likely has also benefited someone else. The key here is that he will have benefited someone else if he is in a competitive market. Generally, markets will police, on their own, any attempt for an individual to be greedy, selfish, unfair etc and in the case where they do not, while governments may be able to help, they often won't for similar reasons because governments do not generally face competition.
In the last part of the discussion about Smith v. Marx v. Keynes I wanted to point out two crucial things. First, all of the above were focused on trying to allocate resources most efficiently. The fact that they came up with different answers is somewhat a result of the different circumstances they saw around them. Second, it is important to know how economists ended up where they are and to value what Smith and economics actually says. Economics does not say that being selfish is the way to get ahead, what it does say is that competition will allow for incentives that align acting in self-interest with service to others.
Next time we'll focus on normative and positive statements. You need to read BE 570-571, 596-603, and 608-612. Then bring an article which addresses an issue you believe needs to be corrected because of greed/fairness/equality etc. Finally, separate this list of statements into normative and positive:
- Higher interest rates cause people to save more
- High income taxes discourage effort
- High taxes on cigarettes discourage smoking
- Road-use charges would increase traffic
- People are more worried about inflation than global warming.
- People should save more
- Government should tax the rich to help the poor
- Smoking should be discouraged
- The tax system should be used to reduce traffic
- Technical change is a bad thing because it puts some people out of work
- Government should do more to reduce carbon emissions in order to save the planet from global warming
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